The Institute for Economic Research and Policy Consulting (IER) has prepared the fifth issue of the External Trade Monitoring, with the special focus on the introduction of a new export support mechanism in Ukraine. Starting from December 1, 2024, new rules for regulating the export of agricultural products will come into effect, including the establishment of minimum export prices and mandatory registration of tax invoices. This issue also analyzes recent changes in external trade, export impediments, and innovations in Ukraine's trade policy and those of its partners.
External Trade. In October, exports grew by 42% year-on-year (YoY) to $3.89 billion. The most significant export growth was observed in the agricultural sector, metallurgy, and mechanical engineering, thanks to improved logistics, stable energy supply, and recovering demand. Imports increased by 8% YoY, reaching $6.20 billion, with the largest contributions from defense goods and energy equipment.
Export Impediments. Despite the stabilization of energy supplies, the main obstacles for exporters remain labor shortages, operational risks, and rising raw material costs, as indicated by the monthly business survey conducted by the IER. Due to the absence of severe attacks on energy infrastructure and related planned outages, electricity supply disruptions have become the fifth most significant barrier for exporters.
New in Ukraine's Trade Policy. Significant progress has been made in negotiations with the EU on the customs union and tax harmonization. Key changes include enhanced risk insurance mechanisms, simplified foreign exchange settlements, and the introduction of customs representation aligned with European standards. Moreover, the government has intensified business support, particularly through grants for the processing industry.
New in EU Trade Policy and Other Trading Partners. This section analyzes global trade developments, including U.S. sanctions against Huawei, anti-dumping duties on Japanese steel, protests by French farmers against agreements with Mercosur, and changes in EU deforestation regulations. The section also discusses the impact of U.S. tariff policies on the global economy and the decline in vehicle exports from South Africa due to stricter environmental standards.
Special Topic – The New Export Support Mechanism. Changes in the regulation of agricultural exports aim to reduce shadow exports, enhance transparency, and increase tax revenues. However, exporters have expressed concerns about potential declines in competitiveness and complications in forward contracts.
